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UCBs: At-par cheque facility usage tightened

Current · Source: Reserve Bank of India · RBI/2013-14/332 · issued 22 Oct 2013 · ~2 min read
Quick answerRBI restricts Urban Co-operative Banks from using at-par cheque facilities for walk-in customers beyond ₹50,000 per individual and mandates KYC compliance for account holders. Banks must maintain records and cross all such cheques 'account payee'.
The rule, in the simplest words
How it plays out — a real example

A KYC & compliance officer in Surat has a walk-in customer who wants to send ₹30,000 to a relative. The officer checks the rule: the amount is under ₹50,000, so he accepts cash, issues an at-par cheque marked 'account payee', and writes down the customer's name and the beneficiary's details in the register. He knows he cannot give an at-par cheque for ₹60,000 to a walk-in—that would break the rule.

What changed

RBI observed UCBs were using at-par cheque facilities from Scheduled Commercial Banks for their own use and for customers, including walk-ins. The circular now restricts this facility: UCBs can use it only for their own operations, for KYC-compliant account holders (with transactions of ₹50,000 or more debited to the customer's account), and for walk-in customers against cash for less than ₹50,000 per individual. UCBs must maintain detailed records of issuance and ensure sufficient balances with the commercial bank.

What it means for you

UCBs must tighten their internal controls on at-par cheque issuance to prevent misuse and align with KYC/AML norms. The ₹50,000 threshold for walk-in customers and mandatory 'account payee' crossing reduce the risk of anonymous transactions. Banks should also shift customers to electronic remittance methods like NEFT/RTGS to improve efficiency and compliance.

What you must do

Who it affects

All Primary (Urban) Co-operative Banks, Scheduled Commercial Banks extending at-par cheque facilities to UCBs, Customers of UCBs using at-par cheque services

❓ Common questions

Can we still issue at-par cheques to walk-in customers?

Yes, but only against cash for amounts less than ₹50,000 per individual. For amounts ₹50,000 or more, the transaction must be debited to a KYC-compliant account holder's account.

What records must we maintain for at-par cheque issuance?

You must keep records of the applicant's name and account number, beneficiary details, and the date of issuance for each at-par cheque.

Are we required to cross all at-par cheques as 'account payee'?

Yes, the circular mandates that all at-par cheques issued by UCBs must be crossed 'account payee' irrespective of the amount involved.

📜 Read the original circular — full text as issued by RBI
RBI/2013-14/332 UBD.BPD (PCB) Cir. No. 32/14.01.062/2013-14 October 22, 2013 The Chief Executive Officer All Primary (Urban) Co-operative Banks. Madam / Dear Sir, Know Your Customer (KYC)/Anti Money Laundering (AML) Standards/Combating Financing of Terrorism (CFT)/ Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – ‘At par’ cheque facility extended to Cooperative Banks by Scheduled Commercial Banks It has been observed that UCBs are utilizing ‘at par’ cheque facility extended by Scheduled Commercial Banks not only for their own use but also for their customers, including walk-in customers. 2. Keeping in view the systemic and supervisory concerns that emanate from such an arrangement, UCBs are advised to utilize the ‘at par’ cheque facility only for the following purposes: i) for their own use. ii) for their account holders who are KYC compliant provided that all transactions of ` . 50,000.00 or more should be strictly by debit to the customer’s account. iii) for walk-in customers against cash for less than ` . 50,000.00 per individual. 3. In order to utilise the ‘at par’ cheque facility in the above manner, UCBs should maintain i) records pertaining to issuance of ‘at par’ cheques covering inter alia applicant’s name and account number, beneficiary’s details and date of issuance of the ‘at par’ cheque. ii) sufficient balances/drawing arrangements with the commercial bank extending such facility for purpose of honouring such instruments. UCBs should also ensure that all ‘at par’ cheques issued by them are crossed ‘account payee’ irrespective of the amount involved. 4. UCBs are advised to make use of more efficient means of remittances for the customers like NEFT or RTGS by providing such services directly or by becoming sub-members of banks providing such services as per regulations in this regard issued by RBI from time to time. Yours faithfully, (P.K. Arora) General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/332 · issued 22 Oct 2013. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Restrict at-par cheque facility to own use, KYC-compliant account holders (with ₹50,000+ transactions debited to account), and walk-in customers for cash under ₹50,000 per individual.
⚙️ Operations
  • Maintain records of each at-par cheque issued, including applicant name, account number, beneficiary details, and date of issuance.
📜 Compliance
  • Ensure sufficient balances or drawing arrangements with the commercial bank to honour at-par instruments.
  • Cross all at-par cheques as 'account payee' regardless of amount.
  • Promote and facilitate NEFT/RTGS for customers as more efficient remittance alternatives.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Branch Manager at a bank this circular applies to (All Primary (Urban) Co-operative Banks, Scheduled Commercial Banks extending at-par cheque facilities to UCBs, Customers of UCBs using at-par cheque services), your first concrete step on “UCBs: At-par cheque facility usage tightened” is: “Restrict at-par cheque facility to own use, KYC-compliant account holders (with ₹50,000+ transactions debited to account), and walk-in customers for cash under ₹50,000 per individual.” (RBI issued this 22 Oct 2013).

  1. Circular: RBI/2013-14/332 -- UCBs: At-par cheque facility usage tightened
  2. Issued: 22 Oct 2013
  3. Action required: Restrict at-par cheque facility to own use, KYC-compliant account holders (with ₹50,000+ transactions debited to account), and walk-in customers for cash under ₹50,000 per individual.
  4. Action required: Maintain records of each at-par cheque issued, including applicant name, account number, beneficiary details, and date of issuance.
  5. Action required: Ensure sufficient balances or drawing arrangements with the commercial bank to honour at-par instruments.
  6. Action required: Cross all at-par cheques as 'account payee' regardless of amount.
  7. Action required: Promote and facilitate NEFT/RTGS for customers as more efficient remittance alternatives.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8520&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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